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Strong demand pushes oil near $80

25 April, 2018, 09:36 | Author: Priscilla Morrison
  • Bijan Zanganeh talks to reporters during the 15th International Energy Forum Ministerial in Algiers

As numerous observers noted, however, the world no longer has a crude oil glut and, given the uncertainties surrounding the Iranian nuclear deal, the Korean situation, and the trade war with China, the price of crude (and therefore gasoline) has been moving up steadily in recent weeks.

However, Saudi Arabia would be happy to see crude rise to $80 or even $100 a barrel, three industry sources said this week, indicating Riyadh will likely seek no changes to the deal in June. The last close of the Indian basket on Friday was $66.02, while on Monday Brent crude was $73.41 a barrel, raising concerns among Indian importers.

USA gasoline prices are at $2.77 on average and well above $3 a gallon on the West Coast.

Brent crude, the global benchmark, hit its highest since OPEC on November 27, 2014 turned its back on curbing output to support prices, a move that triggered a battle for market share and helped deepen a collapse to US$27 in early 2016. But lower oil prices could also mean less production in the US, which would offset some of the increase in OPEC production. That could shift, however, as US refineries kick into high gear for the summer travel season.

USA oil producers are reaping the benefits of OPEC's efforts to balance the crude market by flooding Europe with a record amount of crude, hurting traditional suppliers such as Nigeria.

While the United States lifted its oil export ban in late 2015, the move took time to gain traction among Europe's traditional refineries, which were slow to diversify away from crude from the North Sea, West Africa and the Caspian. "No good and will not be accepted".

The oil markets generally maintain their prices thanks to the restrictions introduced by OPEC earlier this year.

At face value, it appears that there is not much Trump can do about high oil prices.

"Oil prices are artificially Very High!"

With the global economy on a cyclical upswing, how the battle between the price and income effects on oil consumption plays out is crucial, analysts said.

"Currently, all bets are off on the USA staying in the nuclear agreement", said Tamas Varga of oil broker PVM, who added this concern was the most significant element of Brent's recent rally.

Pierre Andurand's oil-focused Andurand Capital Management gained about 7 percent this month through April 13, curbing its year-to-date loss to 0.3 percent, a person with knowledge of the matter said. The first one is the OPEC+ deal on limiting production by exporting countries and geopolitical destabilisation, including the threat of a military confrontation between major producers and exporters of oil.



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